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September 11, 2006
Economic resilience and 9-11
One of the United States' most important intangible assets is our resilience. The events of September 11, 2001 proved that in many ways and on many levels. Speaking as someone who was in the US Capitol complex, I watched as panic was replaced by resolve.
One of the areas of resilience was our economy. As today's Wall Street Journal points out, Economic Fears After 9/11 Proved Mostly Unfounded:
After terrorists attacked the U.S. five years ago, many worried that the economy would lose its hard-won vitality. Companies would need to hire security staff instead of production workers, build up costly inventories and face delays as goods moved across tightened borders.
This is what has happened instead: The number of security guards on business and government payrolls has declined, companies are holding less inventory, and the amount of freight moving though the nation's ports has soared. Not only has the economy grown, it has become more efficient. And office construction in downtown New York and Washington has continued.
The reasons they cite for this outcome are manifold:
Several forces are behind the surprising turn. In 2001, years of heavy spending on technology had already begun paying dividends for many companies, permitting them to become more efficient even as they had to divert some resources to security. Massive government stimulus -- hastened by an economic downturn that was in place before the attacks -- helped the economy crawl out of its slump and get on a sustainable growth path. The medicine included steep interest-rate reductions, tax cuts, emergency spending increases and a federal backstop for terrorism insurance -- meaning the U.S. would front part of insurers' losses in the event of a major attack. Meanwhile, crime rates were falling, reducing security needs in some places even as fears of domestic terror rose.
We got a lot of things right economically directly after the attacks of 9-11 -- even if a lot more policy went wrong afterwards, in my opinion.
So, let us use today to pause and reflect. And tomorrow get back to that task of making things better.
I will be off for a couple of days – it is primary election day tomorrow in DC and I am actively working on a campaign. For those of you in DC, remember to vote!
Posted by Ken Jarboe at September 11, 2006 8:42 AM
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